AJR  Columns
From AJR,   August/September 2009

Too Steep a Price   

Newspapers must protect their integrity as they struggle to find new revenue streams.

By John Morton
John Morton (mortoninc@msn.com), a former newspaper reporter, is president of a consulting firm that analyzes newspapers and other media properties.     

It is fundamental that readers must know what is and is not for sale in their newspapers. In this era of sharply reduced advertising, with newspapers trying to generate new revenue streams, this distinction is more important than ever.

Sadly, the distinction is becoming blurred. To begin with the least damaging example, it once was almost unheard of in modern times for newspapers to sell advertising space on section fronts. Now such advertising is ubiquitous, not only on section fronts but on front pages as well. This damages a newspaper's appearance and robs news of its most compelling space.

While putting this space up for sale is symptomatic of the creeping commercialization of newspapers, it still represents honest transactions and does not undermine the newspaper's integrity. Readers presumably have become accustomed to it.

At least we don't hear about newspapers resorting to some of the common practices of a few decades ago: watering down movie reviews so as not to offend theater advertisers; running puff pieces about big sales events by local retailers; giving the son of a big advertiser a pass on his drunk-driving arrest (all this from my personal experience). Those unsavory actions and similar ones of long ago were not sales transactions in the cash sense, but the newspapers that engaged in them clearly sold some of their integrity.

What we do hear about is newspapers' participating in activities to bring in paying customers that are only peripherally related to journalism event planning. How not to do this was exemplified by the Washington Post's thankfully aborted effort to sell dinners featuring Obama administration notables, lawmakers and other luminaries plus a selection of its journalists at the home of Post Publisher Katharine Weymouth for off-the-record discussions. Cost to sponsor: $25,000, or $250,000 for a series of 11 dinners.

Now this venture, revealed not by the Post but by Politico, was so rich in potential conflicts of interest especially having Post journalists involved in off-the-record discussions that it forces the question: What were they thinking? After an uproar in the Post's newsroom and elsewhere, Weymouth and Post Executive Editor Marcus Brauchli took responsibility for this horrible idea.

But they and two or three other top news hands did a lot of bobbing and weaving about how it all came about and how a flier sent to prospective clients had not been properly vetted and had caused the whole thing to be misconstrued. It is hard for me to imagine how the most careful vetting could change what was going on here: selling the soul of the newspaper. Post Ombudsman Andrew Alexander put it well: "an ethical lapse of monumental proportions."

It is true that the Post has been losing money since early last year, but this contretemps points up how important it is for newspapers to be careful in straying from their fundamental mission gathering and presenting the news in efforts to increase revenue. Apparently event planning, like section-front and front-page ads, is with us to stay, since other news organizations (including Politico) have engaged in it or are planning to.

I can even imagine that newspaper-sponsored events focusing on current issues, even if participants have to pay to attend, can contribute to the public weal, if indeed the public does benefit. In other words, if a newspaper sponsors an event, what comes out of it should be made abundantly available to the public. That's what newspapers are for. It's not just about making money.

Newspapers face a great moral hazard as they deal with an economic model broken by the Internet and all of its ramifications for the newspaper industry's traditional revenue streams. The news thieves (the polite term is "aggregators," but I'm weary of being polite about this) are taking great economic advantage of the decision by most newspapers to make the information they gather free for the taking on their Web sites.

The prevailing wisdom has been that information on the Internet wants to be free, so most newspapers followed along, to their regret. The problem is that this is a false premise. Actually, information wants to be gathered and people want to receive it and pay for it by enduring advertising on over-the-air broadcasts, by paying for subscriptions to cable services, by subscribing and putting up with advertising in newspapers and magazines. The problem is how to charge for information on the Internet.

Various efforts are under way to try to rectify this situation, some behind the scenes because of antitrust concerns and others more public. Eventually, a way will be found. Buffeted though they are, newspapers still have an advantage in that they remain the only operations that produce mass amounts of desirable content. The moral hazard comes from newspapers' cutbacks in their journalism and their reputations as they try to shore up finances which will make selling to Internet users all the more difficult.